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Germany Cuts 2019 Economic Forecast    03/19 07:35

   BERLIN (AP) -- The German government's panel of economic advisers nearly 
halved its German growth forecast for this year to 0.8 percent --- the latest 
in a long list of downgrades for Europe's biggest economy.

   In a regular update Tuesday, the panel cut its 2019 forecast from the 
previous 1.5 percent but said growth should accelerate next year to 1.7 
percent. The downgrade follows cuts in the German outlook by the European 
Commission and the International Monetary Fund.

   The independent experts said in a statement that the lower forecast was 
strongly influenced by the after-effects of the economy's weak performance at 
the end of last year, when it was dragged down largely by one-time factors 
related to new car emissions standards. German carmakers faced bottlenecks 
getting vehicles certified under new, more realistic emissions tests that came 
into force Sept. 1.

   They also noted high risks for the future from factors such as Brexit 
uncertainty and global trade disputes.

   Christoph Schmidt, the group's chairman, said that "the peak of the German 
recovery is over. A recession however is not expected in view of robust 
domestic demand."

   The German slowdown complicates the Europe's economic picture. While falling 
unemployment and rising wages are supporting consumer spending at home, the 
economy faces external headwinds from slowing trade and worries that U.S.-China 
trade talks will fail and lead to higher tariffs and further increasing the 
drag from trade.

   The European Central Bank took added steps to support the recovery at its 
last meeting March 7, pushing back the earliest date for an interest rate 
increase and announcing a new round of cheap loans for banks to enable them to 
lend to businesses.

   The bank had ended a 2.6 trillion-euro ($2.9 billion) bond purchase stimulus 
in December after almost four years. But the worsening outlook pushed the bank 
to shift course toward maintaining existing stimulus rather than withdrawing 
it. 


(KA)

 
 
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